What Does Yahoo! Get From Silver Lake?

Private-equity firm Silver Lake on Wednesday offers to buy a minority stake in Yahoo! for $16.60 a share.

Chris Ciaccia

NEW YORK (TheStreet) -- Is the endgame for Yahoo!(NYSE:YHOO) near?

Private-equity firm Silver Lake on Wednesday morning offered to buy a minority stake in Yahoo! for $16.60 a share.

The Silver Lake offer was below an offer made by another private-equity firm, TPG Capital. Silver Lake's bid values all of Yahoo! at $20.6 billion. That is significantly lower than some investors believe the company is worth, including Third Point LLC's Dan Loeb.

Loeb valued the company at $27 to $28 a share based on a number of different calculations, including a stake in Alibaba Group, which he valued at $25 billion alone.

What exactly is Silver Lake going to do with the Yahoo! stake?

Yahoo has a dearth of potential bidders, but the outcome is still unclear.

The bid could potentially give Yahoo! time and a fresh infusion of capital it needs to successfully turn around the operations of a company that has lagged behind Google(:GOOG) in terms of search market share, and ultimately forced it to outsource its search to Microsoft(NYSE:MSFT).

Silver Lake could potentially force Microsoft's hand to do a deal at a higher price than it wanted, as the two are said to already be partners for a potential Yahoo! deal. Microsoft bid for Yahoo! in 2008, offering $31 a share, but was ultimately rebuffed for a higher offer that never came.

There is a board meeting at Yahoo! Wednesday, at which Chairman Roy Bostock, co-founder Jerry Yang and others will take up the matter. Considering the fact that there are other offers out there, Yahoo!'s board may decide to keep the process open, and reject Silver Lake's offer.

Yahoo! hopes to have an ultimate decision on its future by the end of the year.

The large stake, 19.9%, allows Silver Lake to stop activist investors from clamoring for a higher bid, and could potentially keep the company intact.

Much of the value of Yahoo! is in its Asian assets, its 40% stake in Alibaba, and Yahoo Japan. A large stake in the company could preclude calls for Yahoo! to sell off those stakes, either to the public markets, back to Alibaba, or the tax-efficient structure that has been bandied about in the past.

A 19.9% stake doesn't preclude Yahoo! from doing the tax-efficient structure, as there is not an ownership change, but rather a significant stake being taken in the company.

Bloomberg noted that TPG Capital's bid was higher than the Silver Lake offer, but given the close working nature between Silver Lake and Microsoft, there could be pressure from the board to accept the Silver Lake offer.